Ruthless con that bankrolled a spree
Jan 17 2009 by Dan Warburton, The Journal
THE lavish lifestyle of conmen who fleeced investors of at least £65m can be exposed today.
Fraudsters attracted money into their crooked company by promising speculators profits could be made in the world of derelict property.
But the life they led with the millions that poured in was far removed from burnt out and run-down houses. Instead, they splurged hundreds of thousands of pounds on luxury cars and designer clothes.
Among the extravagant buys was the Mark II Jaguar driven by Inspector Morse in the TV drama.
And they spent £500,000 on a staff Christmas party – with a £100,000 prize for the winner of a raffle.
John Potts, Peter Gosling, Natalie Laverick, Eric Armstrong and Peter Graham were arrested after a four-year investigation exposed their property scam.
In a two-year stint their Gateshead-based Practical Property Portfolio (PPP) business pulled in more than £80m – at least £65m of which was squandered illegally.
Documents seen by The Journal give an insight into the fraudsters’ penchant for fast cars, designer clothing and lavish parties.
Alongside the Morse car, they spent £400,000 on a fleet of luxury cars, including the Aston Martins and Bentleys beloved of mega-rich Premiership footballers.
Information released by the Serious Fraud Office also showed Potts spent almost £300,000 on furnishing his Sunderland home with antiques and furniture. But decorating in regal fashion was not his only hobby. Alongside fellow fraudster Gosling, he indulged a passion for horse racing to the tune of around £250,000.
And at the indulgent £½m Christmas party in 2002 for their 100 employees, raffle prizes included a £100,000 Spanish villa, a boat and a £10,000 cash prize.
Det Insp Phil Butler, of the Economic Crime Unit at Northumbria Police, said the company had preyed on innocent investors, who never had any chance of making money.
He said: “This was a protracted and complex investigation by the Serious Fraud Office and Northumbria Police.
“The offenders in this case used the money of hundreds of innocent people for their own gain to fund extremely lavish lifestyles.
“Investors, unaware of the true nature of this scam, were defrauded of substantial amounts. In some cases the properties they had put significant sums of money into were derelict or even burnt out, so there was never any chance of seeing a return on their investments.”
The five faced a four-month trial at Newcastle Crown Court charged with conspiracy to defraud potential and actual investors between January 2001 and March 2003 when PPP was closed down.
But after extensive legal discussions, Potts, 60, of Silksworth Hall Drive, Sunderland; Gosling, 57, of Rothbury Gardens, Lobley Hill; and Laverick, 28, also of Silksworth Hall Drive, admitted the conspiracy charge.
Graham, 62, of Topcliffe, Sunderland, admitted three counts of fraudulent trading and Armstrong, 55, of Moorside North, Fenham, Newcastle, two fraudulent trading counts.
A spokesman for the SFO said it would seek to reclaim money from the fraudsters. PPP and its spin-off firms used adverts, brochures and a slick sales pitch to persuade investors to part with their money.
The SFO said: “Investor claims totalled £16m when the company was wound up in 2003. However, it is thought that this figure is unrepresentative of the real total lost. It is estimated that at the time the liquidator intervened there was almost £65m worth of investors’ funds providing no genuine return.
“PPP sold about 4000 residential properties to at least 1,750 investors in exchange for an estimated £80m. Most of the investors were individuals who chose to entrust their savings to PPP although a number of larger organisations were also taken in by PPP’s promises.”
The offenders used the money of hundreds of innocent people for their own gain
